Help on FNPF

LucyN

Hi everyone,

Im revising for my FNPF exam on tuesday

However, i cannot for the life of me work out this answer (its probably simple but its driving me mad!)

Budgeted Overheads £30,000
Budgeted Output 3000 units and 15000 hrs labour
Actual Overheads £33000
Actual output 4000 units and 19000 hrs labour

What is the fixed overhead capacity variance?

And how do i get to that figure?!

Any help greatly appreciated! Thank you!

zakira

Hi I've i think that the fixed overhead capacity is the difference between what was budgeted and what was actual. So 4000 less 3000 which is + 1000 more then budgeted for.

zakira

But it's been a while since i did pev so i maybe wrong..

Matt444

Lucy,

The fixed overhead capacity and efficiency variances are always calculated on the OAR based on budgeted labour hours.

The OAR = £30,000 / 15,000 = £2 per labour hour

Therefore, the capacity variance is:

Budget Hrs x BOAR ie (15,000 x £2) £30,000
Actual Hrs x BOAR ie (19,000 x £2) £38,000
Variance = £8,000 (F)

The variance is favourable to reflect the fact that we have exceeded our budgeted capacity - worked longer / more hours than budgeted for.

Paisley

LucyN wrote: »

Hi everyone,

Im revising for my FNPF exam on tuesday

However, i cannot for the life of me work out this answer (its probably simple but its driving me mad!)

Budgeted Overheads £30,000
Budgeted Output 3000 units and 15000 hrs labour
Actual Overheads £33000
Actual output 4000 units and 19000 hrs labour

What is the fixed overhead capacity variance?

And how do i get to that figure?!

Any help greatly appreciated! Thank you!

Hi LucyN

I am also revising for the Financial Performance CBA and am new on here.

My textbook says:

The fixed overhead capacity variance shows how the amount of resources used (compared with the budget) affects the volume of output. The capacity variance explains how the output has been achieved through the use of more or less resources. When using labour hours as a base a favourable capacity variance indicates that additional output was created through the use of additional labour hours.


This is how I worked it out:

OAR: £30,000 Budgeted Overheads / 15,000 Budgeted Hours = £2 per labour hour

19,000 Actual Hours x £2 OAR = £38,000

LESS

15,000 Budgeted Hours x £2 = £30,000


This gives you an Overhead Capacity Variance of £8,000 Favourable.


Hope that helps??

Good luck with your exam on Tuesday.

Paisley

Ah... beaten to it!!

Nice to see we have the same answer though

LucyN

Thank you so much! Makes sense now!

Good luck with you exam too!

Paisley

Thanks Lucy

Matt444

Hi Guys,

Has anyone taken this CBT yet? Did the second section contain two written tasks like the practice?

Thanks
M

Paisley

Hi Matt

Our FP CBA was cancelled last week. We're due to take it in January now. I'm also interested to know if the structure is the same as the practice one. It would be nice to see more than one practice CBA online.

Good luck anyway.